Top Italian soccer club seized by L.A.-based Oaktree after owner defaults on loan

Los Angeles-based Oaktree Capital Management took ownership of Italy’s Inter Milan, one of the most storied soccer clubs in Europe, after its Chinese owner defaulted on a loan.

The U.S. fund took control of the club Wednesday after conglomerate Suning Holding Group Co. failed to repay $428 million, Oaktree said in an emailed statement. The collateral backing the debt was a majority stake in the club.

“Our initial focus is operational and financial stability,” Alejandro Cano, managing director and co-head of Europe for Oaktree’s global opportunities strategy, said in the statement. Oaktree said it was committed to the long-term success of the club and recognizes its responsibilities to the fans.

Inter won Italy’s top domestic Serie A league this season and was runner-up in the UEFA Champions League last year. Inter’s new owners look set to make changes to the club’s board, bringing in more Italian and European members, according to people with knowledge of the plans.

Oaktree, a $192-billion asset manager known for distressed debt investing, has form in taking over soccer clubs: It did so with troubled French side Stade Malherbe Caen in 2020, and has since exited its stake. Oaktree co-founder Steve Kaplan is also an investor in Welsh team Swansea City.

This also isn’t the first time a creditor has taken ownership of a soccer club in Milan. In 2018, Elliott Management swapped the debt of the city’s other major team, AC Milan, into equity in the club after the previous owner defaulted on its liabilities.

For Inter, Suning had been in talks with Pacific Investment Management Co. to refinance its debt in recent weeks, but it couldn’t get a deal signed before the Oaktree loan came due on Tuesday.

Suning’s takeover of Inter in 2016 marked the high point of Chinese involvement in European soccer. A number of Chinese tycoons embraced a government push to transform the sport in the country by predominantly buying stakes in famous clubs in Europe. However, domestic financial struggles have led to the loss of positions in clubs including Aston Villa and Atletico Madrid.

Oaktree loaned the money to Suning in 2021 to help support Inter’s finances as the pandemic kept stadiums closed to the public. Documents signed at the time and seen by Bloomberg News stated that after a default, creditors or representatives acting for them were entitled “immediately and without demand, advertisement or notice of any kind” to enforce the pledge granted by Suning, including seizing collateral if repayment isn’t possible.

After the Oaktree takeover, Inter still has some outstanding liabilities, including more than $400 million in high-yield bonds sold to institutional investors and set to mature in early 2027. Those notes are issued by Inter Media and Communication, a unit that owns the club’s broadcast and sponsorship rights. The cash flow from those first repays obligations to bondholders, before trickling through to the rest of the group.